150% of the grant amount. Award agreements generally provide that vesting is accelerated in certain circumstances, such as death and disability. Delivery of the underlying shares of common stock, which generally occurs over a three-year period, is conditioned on the grantees satisfying certain vesting and other requirements outlined in the award agreements. The Company recognized equity-based compensation expense of $17.3 million for the year ended December 31, 2023. As of December 31, 2023, there was $22.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.70 years. 17. INTEREST INCOME AND INTEREST EXPENSE Refer to the “Significant Accounting Policies” Note for details surrounding the Company’s accounting policy related to net interest income on securities and loans. The following table summarizes the interest income recognition methodology for Residential Securities: Interest Income Methodology Agency Fixed-rate pass-through (1) Effective yield (3) Adjustable-rate pass-through (1) Effective yield (3) Multifamily (1) Contractual Cash Flows CMO (1) Effective yield (3) Reverse mortgages (2) Prospective Interest-only (2) Prospective Residential credit CRT (2) Prospective Alt-A (2) Prospective Prime (2) Prospective Subprime (2) Prospective NPL/RPL (2) Prospective Prime jumbo (2) Prospective (1) Changes in fair value are recognized in Other comprehensive income (loss) on the accompanying Consolidated Statements of Comprehensive Income (Loss) for securities purchased prior to July 1, 2022. Effective July 1, 2022, changes in fair value are recognized in Net gains (losses) on investments and other on the accompanying Consolidated Statements of Comprehensive Income (Loss) for newly purchased securities. (2) Changes in fair value are recognized in Net gains (losses) on investments and other on the accompanying Consolidated Statements of Comprehensive Income (Loss). (3) Effective yield is recalculated for differences between estimated and actual prepayments and the amortized cost is adjusted as if the new effective yield had been applied since inception. The following table presents the components of the Company’s interest income and interest expense for the years ended December 31, 2023, 2022 and 2021. For the Years Ended December 31, 2023 2022 2021 Interest income (dollars in thousands) Agency securities (1) $ 2,740,320 $ 2,144,696 $ 1,484,354 Residential credit securities 225,266 140,220 78,681 Residential mortgage loans (1) 703,838 410,229 182,359 Commercial investment portfolio (1) (2) 28,385 81,855 237,597 Reverse repurchase agreements 33,772 1,887 45 Total interest income $ 3,731,581 $ 2,778,887 $ 1,983,036 Interest expense Repurchase agreements $ 3,337,527 $ 1,026,201 $ 116,974 Debt issued by securitization vehicles 443,584 225,216 93,006 Participations issued 50,357 39,366 12,071 U.S. Treasury securities sold, not yet purchased 11,497 — — Other — 18,952 27,192 Total interest expense 3,842,965 1,309,735 249,243 Net interest income $ (111,384) $ 1,469,152 $ 1,733,793 (1) Includes assets transferred or pledged to securitization vehicles. (2) Includes commercial real estate debt and preferred equity and corporate debt. ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Financial Statements F-32
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